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Startup Exits and Liquidity: Payouts, Lockups and Failed Deals
An announced valuation does not tell you what reaches your account or when you can use it. Start with the claims on the sale proceeds, then check the restrictions and closing conditions between your shares and cash.
This collection covers both completed exits and transactions that never close. Read the payout mechanics before the case studies so you can separate price, timing and the cost of a failed deal.
Start here
Work out the payout
Trace sale proceeds through preferences, common stock and the unused option pool.
Liquidation Preference Waterfalls: The Exit Math Founders Miss
Calculate 1x non-participating, participating, multiple, and senior liquidation preferences before a sale turns the headline price into a very different common-stock payout.
How Founders Exit With Nothing
A $465 million sale that paid the founders zero, a court that called it entirely fair, and the arithmetic that turns a decade of your life into a below-market engineering salary.
What Happens to the Unused Option Pool When the Company Is Acquired?
Ungranted option pool shares usually receive no acquisition consideration, but the pricing concession they created at financing survives to closing. Model the pool twice.
Next steps
Check when liquidity arrives
Examine lockups and what remains when a planned transaction falls through.
SpaceX IPO Lockups Explained: The Company Went Public Before Its Shares Did
How SpaceX's staged IPO lockups released 911.5 million shares, why the stock rose anyway, and what founders should map before calling an IPO a liquidity event.
Your Broker Shows a Contra-CUSIP. What Actually Happened?
A contra-CUSIP usually means your position was segregated for a tender, appraisal claim, or other corporate-action instruction. Here is what the code proves, what it cannot prove, and what to ask your broker.
What Happens When a SPAC Liquidates? Artius II Chose No Deal
Artius II raised $220 million, found no merger by its deadline, and chose liquidation. Here is what expires, who gets cash, and what target founders should learn.
Tools and reference
Try the numbers
- Dilution Calculator
See exactly how funding rounds affect your ownership stake.
Terms to know
- Liquidation Preference
Liquidation preference decides who gets paid first when a company sells, and how little can be left for common stock. With worked numbers.
- Earnout
An earnout pays part of the price later, if targets are hit. Delaware enforces the efforts clause as written, so that clause is the whole negotiation.
- Drag-Along Rights
A drag-along right forces minority holders into a sale the majority has approved. Agreeing to vote in favour can also cost you appraisal rights.
- Break-Up Fee
A break-up fee compensates a jilted buyer if the target walks. Delaware asks whether the fee sits within a range of reasonableness, not a fixed cap.